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The main Canadian stock index recorded its sharpest rise for almost three years on Wednesday, after US Federal Reserve Chairman Jerome Powell suggested a pause in interest rate hikes next year.
North American markets were quiet until Powell's lunch in New York triggered a recovery of risky badets outside of energy.
"The Canadian and US stock markets are showing decent numbers today," said Candice Bangsund, Portfolio Manager for Fiera Capital.
She said the market had interpreted her remarks as dovish, which means that rates will not rise much higher, or that the US central bank could pause in early 2019 after its rise expected next month.
"The environment of rising interest rates observed this year has created many problems for the stock markets.The prospect of a slowdown or a slowdown in the Fed is therefore a good one. news for equity investors, "Bangsund said in an interview.
"A more cautiously optimistic tone"
Markets have been shaken by Powell's bellicose tone and his insistence that rates go up while the economic outlook is optimistic.
"So, I have the impression that his speech today may have reverted to some of this hawkish attitude and adopted a more cautiously optimistic or balanced tone."
The S & P / TSX Composite Index closed up 227.16 points to 15,171.25, the largest single day gain since February 17, 2016.
The cannabis-focused health care sector had the largest gains of the day, but the recovery was driven by key sectors of materials, industry and finance, as a result of the rising prices for gold and metals and strong bank results.
US Federal Reserve Chairman Jerome Powell will speak at the Economic Club in New York on Wednesday. (Mark Lennihan / Associated Press)
The December gold contract increased US $ 10.20 to $ 1,223.60 per ounce, while the March copper contract increased from 8.75 cents to $ 2.81 per pound.
Telecommunications and energy were the only sectors to fall.
The January crude contract was down $ 1.27 to $ 50.29 a barrel. Oil prices dropped in an inventory report, indicating that a 10th consecutive week of stockpiling in the United States threatened a balance between supply and demand around the world.
In New York, the Dow Jones Industrial Average rose 2.5% to 617.70 points to settle at 25,366.43, the largest gain in eight months. The S & P 500 index rose 61.61 points to 2,743.78, while the Nasdaq composite index was up almost 3% or 208.89 points, to 7,291 points, 59.
Welcome to the recovery of technology stocks
The recovery helped the cyclical sectors of the market at the expense of more defensive games such as telecommunications and utilities.
Sectors such as technology and consumer discretionary, which absorbed the biggest successes at the recent auction, recovered the most on Wednesday
However, with a meeting coming up this weekend between the US and Chinese presidents, the next few days could be a completely different story, Bangsund said.
"The main risks are so many that the tables could be lifted tomorrow or at night," she said, highlighting the trade battle between the two largest global economies, the meeting of OPEC next week , the Brexit and the confrontation of the Italian budget with the EU.
The Canadian dollar traded at an average of 75.18 US cents, compared to an average of 75.25 US cents on Tuesday.
The natural gas contract in January increased 40.7 cents to US $ 4.70 per mmBTU and the March copper contract increased 8.75 cents to $ 2.81 per pound.
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